We’ve Seen This Movie Before

The past five years have been a Groundhog Day recovery. Every day, we wake up hoping that this will be the day that the economy finally picks up. And every day, we wake up to hear Sonny and Cher playing find out that it hasn’t. Jobs growth just keeps chugging along at 2 percent pretty much no matter what.

I think there are several points to make here. First, reversion to trend doesn’t suggest a structural economic problem or, at least, not a recent one. It suggests a cyclic problem.

Second, the U. S. birth rate is just under 2%, right about where it’s been for the last 40 years. We don’t have the same demographic problem that Russia or Germany or Japan have. We don’t import large numbers of foreign workers because we don’t have enough workers in the pipe. We import large numbers of foreign workers to save the business models of businesses that require a continuous stream of low income workers (and the incomes of their owners).

Finally, we’ll never escape the problem we have which I would characterize as too many people who have been unemployed in the long term without asking the right question. I think the right question is “Why were so many people employed before?” rather than “Why aren’t jobs being created faster?”